Iran Attack Will Launch Energy Stocks – 5 Strong Buy High-Yield Companies You Have To Own

Energy stocks have been strong over the last six months because the sector is benefiting from a powerful mix of tightening global supply, disciplined capital spending, and surprisingly resilient demand. Crude prices have remained supported as major producers, including OPEC and OPEC+, continue to manage output. So that you know, OPEC+ has discussed a modest output increase for April. At the same time, U.S. shale companies have prioritized shareholder returns over aggressive production growth, limiting new supply. Geopolitical tensions in key producing regions, especially in the Middle East, have added a risk premium to oil and natural gas prices, while steady economic activity has kept consumption firm. With the United States’ attack on Iran, an escalation in pricing for oil is a given. However, the companies we are focusing on have strong cash flows, rising dividends, and continued share buybacks, and are not overbought. This combination has attracted both passive income-focused and value-oriented investors back into energy stocks. While some of our favorite stocks have exploded higher and are out of the sweet-spot buy range they were in most of last year, five top companies with big high-yield dividends are still strong Buy stocks.

While the mega-cap integrated giants have soared in price over the last six months, and are much more expensive now than they were last summer, some of the other companies in the sector, that dominate their respective energy silos, still offer outstanding entry points, and dividend yields that are reliable and have the potential to be raised year in and year out. We screened our 24/7 Wall St. energy database for high-yielding bargains and found five that investors seeking dependable passive income may want to consider. All five are rated Buy at the top Wall Street firms that we cover.

Why do we cover the high-yielding energy dividend stocks?

Since 1926, dividends have accounted for approximately 32% of the S&P 500’s total return, while capital appreciation has accounted for 68%. Therefore, sustainable dividend income and the potential for capital appreciation are essential to total return expectations. A study by Hartford Funds, in collaboration with Ned Davis Research, found that dividend stocks delivered an annualized return of 9.18% over the past 50 years (1973-2023). Over the same timeline, this was more than double the annualized return for non-payers (3.95%).

BP

This company is one of the premier European integrated oil giants, paying shareholders a substantial 5.14% dividend. BP p.l.c. (NYSE: BP) engages in the energy business worldwide.

It operates through:

• Gas & Low Carbon Energy
• Oil Production & Operations
• Customers & Products
• Rosneft segments

BP produces and trades natural gas, offers biofuels, operates onshore and offshore wind and solar power generating facilities, and provides decarbonization solutions and services, such as hydrogen and carbon capture, usage, and storage.

The company is also involved in the convenience and mobility business, which includes managing the sale of fuels to wholesale and retail customers, as well as convenience products, aviation fuels, and Castrol lubricants. Additionally, it refines, supplies, and trades oil products and operates electric vehicle charging facilities.

Additionally, it produces and refines oil and gas, and invests in upstream, downstream, and alternative energy companies. It also invests in advanced mobility, biotechnology, and low-carbon products, as well as carbon management, digital transformation, and power and storage solutions.

Wolfe Research has an Outperform rating with a $51 target. 

Chord Energy

This is a very off-the-radar idea that still offers investors an outstanding entry point for the shares and a strong 4.93% dividend. Chord Energy Corporation (NASDAQ: CHRD) is an independent exploration and production company engaged in the acquisition, exploration, development, and production of crude oil, natural gas liquids (NGL), and natural gas primarily in the Williston Basin.

The Company’s operations are focused on the North Dakota and Montana areas of the Williston Basin, targeting the Middle Bakken and Three Forks formations, which are present across a substantial portion of its acreage.

Chord Energy has an average daily production of approximately 232,737 net barrels of oil equivalent.

The company has approximately 9,011 (4,174.2 net) total gross productive wells, of which the Company operated 4,824 gross (3,752.2 net) productive wells. It sells its crude oil, NGL, and natural gas production to refiners, marketers, and other purchasers that have access to nearby pipeline and rail facilities.

Piper Sandler has an Overweight rating with a huge $151 target price.

Energy Transfer

Energy Transfer is one of North America’s largest and most diversified midstream energy companies. This top master limited partnership is a safe option for investors seeking energy exposure and income, as the company pays a 7.05% distribution yield. Energy Transfer LP (NYSE: ET) owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with a strategic footprint across all major domestic production basins.

The company is a publicly traded limited partnership with core operations that include:

• Complementary natural gas midstream, intrastate, and interstate transportation and storage assets
• Crude oil, natural gas liquids (NGL), and refined product transportation and terminalling assets
• NGL fractionation
• Various acquisition and marketing assets

Following the acquisition of Enable Partners in December 2021, Energy Transfer owns and operates over 114,000 miles of pipelines and related assets in 41 states, spanning all major U.S. producing regions and markets. This further solidifies its leadership position in the midstream sector.

Through its ownership of Energy Transfer Operating, L.P., formerly known as Energy Transfer Partners, L.P., the company also owns Lake Charles LNG Company, the general partner interests, the incentive distribution rights, and 28.5 million standard units of Sunoco LP (NYSE: SUN), and the public partner interests and 39.7 million standard units of USA Compression Partners, LP (NYSE: USAC).

TD Cowen has a Buy rating on the shares, with a $21 target price.

TotalEnergies

TotalEnergies SE is an integrated energy and petroleum company founded in 1924 and is one of the seven supermajor oil companies. This French-integrated giant is another excellent way to play the energy sector from the European side. It sports a massive 4.87% dividend. TotalEnergies SE (NYSE: TTE) is an integrated oil and gas company with a global presence.

The company operates through four segments:

• Exploration and production
• Integrated Gas
• Renewables and power
• Refining, chemicals, marketing, and services

The company’s Exploration & Production segment involves oil and natural gas exploration and production activities in approximately 50 countries.

The Integrated Gas, Renewables & Power segment engages in:

• Liquefied natural gas (LNG) production
• Shipping, trading, and regasification activities
• Trading of liquefied petroleum gas (LPG), petcoke and sulfur, natural gas, and electricity
• Transportation of natural gas
• Electricity production from natural gas, wind, solar, hydroelectric, and biogas sources
• Energy storage activities; and development and operation of biomethane production units, as well as providing energy efficiency services

The TotalEnergies Refining & Chemicals segment refines petrochemicals, including olefins and aromatics, as well as polymer derivatives such as polyethylene, polypropylene, polystyrene, and hydrocarbon resins. It also converts biomass and processes elastomers. This segment also trades and ships crude oil and petroleum products.

Its Marketing & Services segment produces and sells:

• Lubricants
• Supplies and markets petroleum products, including bulk fuel, aviation and marine fuel, special fluids, compressed natural gas, LPG, and bitumen; and fuel payment solutions

The company also operates approximately 15,500 service stations.

Wolfe Research has an Overweight rating with a $83 target price.

Western Midstream Partners

While somewhat off the radar, this is the highest-yielding stock in the group, with an 8.84% dividend yield, and offers an outstanding entry point. Western Midstream Partners, LP (NYSE: WES) acquires, owns, develops, and operates midstream assets.

The Company is engaged in the business of gathering, compressing, treating, processing, and transporting natural gas, as well as gathering, stabilizing, and transporting condensate, natural gas liquids (NGLs), and crude oil. Additionally, the Company collects and disposes of produced water.

The  midstream assets are located in:

• Texas
• New Mexico
• Colorado
• Utah
• Wyoming

In addition, as a natural gas processor, the Company also buys and sells natural gas, NGLs, and condensate on its own behalf and as an agent for its customers under specific contracts. The Company’s subsidiaries include:

• Western Midstream Operating GP, LLC
• Western Midstream Services, LLC
• Western Midstream Services Holdings, LLC
• Western Midstream Operating, LP

Mizuho has an Outperform rating and a $46 target price.

Consider this Exchange Traded Fund (ETF)

Those looking to avoid the pesky K-1s can always purchase shares in the ALPS Alerian MLP ETF (NYSE: AMLP), which pays a substantial 7.86% dividend. Investors receive a 1099 instead of a K-1. You will receive a K-1 from Energy Transfer and Western Midstream.